Grimstad v. Knudsen

• Decision Date: 21 December 2016
• Docket Number: A154574 (Control), A152322
• Citation: 283 Or.App. 28,386 P.3d 649
• Parties: Jay S. GRIMSTAD, Karen J. Grimstad, and Paul N. Grimstad, Plaintiffs–Respondents, Cross–Appellants, v. Bruce A. KNUDSEN and Robert G. Knudsen, Defendants–Appellants, Cross–Respondents.
• Court: Oregon Court of Appeals

283 Or.App. 28

386 P.3d 649

Jay S. GRIMSTAD, Karen J. Grimstad, and Paul N. Grimstad, Plaintiffs–Respondents, Cross–Appellants,

v.Bruce A. KNUDSEN and Robert G. Knudsen, Defendants–Appellants, Cross–Respondents.

A154574 (Control), A152322

Court of Appeals of Oregon.

Argued and submitted June 9, 2015.

December 21, 2016

Eli D. Stutsman, Portland, argued the cause and filed the briefs for appellants-cross-respondents.

Richard L. Grant and Bob Casey, Portland, argued the cause for respondents-cross-appellants. With them on the joint briefs was Richard L. Grant, P.C.

Before Sercombe, Presiding Judge, and Hadlock, Chief Judge, and Tookey, Judge.

SERCOMBE, P.J.

This case is a dispute over the proceeds from a sale of real property. The property in question, a house in Durham, Oregon (the Durham property), was once owned by Madeline Grimstad and her husband, Neal Grimstad. Through a codicil to her will (the second codicil), Madeline left the Durham property to plaintiffs—her stepchildren and Neal's biological children—if Neal predeceased her, and if she owned the property at the time of her death. The second codicil was the only specific devise in Madeline's will, and defendants—Madeline's biological children—were the residuary devisees under the will. Madeline also designated defendants as her attorneys-in-fact, which placed them in charge of her care and her financial affairs after she was diagnosed with Alzheimer's disease

and became incompetent.

Using the power of attorney, defendants sold the Durham property and used the proceeds to pay for Madeline's Alzheimer's care. Plaintiffs brought an action, raising claims for intentional interference with prospective economic advantage,¹ accounting, and constructive trust, asserting that defendants had interfered with their inheritance by selling the Durham property and using the proceeds from the sale for her care, instead of using other assets that Madeline owned. On defendants' motion for summary judgment, the trial court dismissed those claims. However, the court also granted plaintiffs' motion for leave to amend their complaint. Plaintiffs filed an amended complaint, raising claims of unjust enrichment and money had and received. The court subsequently rejected several dispositive motions by defendants, and, after a bench trial, granted relief to plaintiffs on both of their claims.

Defendants appeal, raising seven assignments of error, and plaintiffs cross-appeal, raising two. We write to address defendants' sixth assignment of error on appeal, asserting that the trial court erred in granting relief to plaintiffs, and plaintiffs' first assignment of error on cross-appeal, arguing that the trial court erred in granting defendants' motion for summary judgment with respect to the intentional interference with prospective economic advantage claim. For the reasons that follow, we conclude that the trial court erred in granting plaintiffs relief for unjust enrichment and money had and received, and that the trial court did not err in granting defendants' motion for summary judgment.² We therefore reverse and remand on appeal and affirm on cross-appeal.

FACTUAL AND PROCEDURAL HISTORY

In reviewing a trial court's determinations following a bench trial, we "review the [trial] court's explicit and implicit findings of fact for any evidence in the record to support them, and the legal consequences of those facts for legal error." Emrys v. Farmers Ins. Co. of Oregon , 275 Or.App. 691, 693, 365 P.3d 1119 (2015) (internal quotation marks omitted); Wilson v. Gutierrez , 261 Or.App. 410, 411, 323 P.3d 974 (2014).

When we address plaintiffs' challenge on cross-appeal to the trial court's ruling granting defendants' motion for summary judgment, we view the facts relevant to that claim in the light most favorable to plaintiffs, in accordance with our standard of review for motions for summary judgment. ORCP 47 ; Jones v. General Motors Corp. , 5 Or. 404, 408, 939 P.2d 608 (1997). We state the facts in accordance with those standards.

Madeline and Neal Grimstad were married in 1980. Each had substantial assets from a previous marriage. After they were married, Madeline and Neal entered into a post-nuptial agreement, separately providing for the inheritance of their respective biological children. Neal executed a will and two codicils, devising his estate in trust to support Madeline during her life and, after her death, devising the remainder to his three children from his previous marriage, who are plaintiffs in this case. Madeline also executed a will in which she devised her estate, in equal shares, to her two children from her previous marriage, who are defendants in this case.

In 1980, Neal and Madeline purchased the Durham property as joint tenants with rights of survivorship. They lived in the Durham property until 1986, when they moved into the Sisters property, which was solely owned by Madeline. In 1998, Madeline caused the Sisters property to be titled to herself and defendants as tenants in common, and each of them held a one-third interest in the property until Madeline's death.

In June 1991, Madeline executed a power of attorney authorizing defendants to exercise control over her financial affairs on her request or if she became incapacitated. The document provided, in part, that defendants were empowered to make expenditures for Madeline's care and support; to "manage, administer, operate, maintain, improve and control" any of Madeline's property; to "sell, convey, grant, exchange, transfer, option, convert, mortgage, pledge, consign, lease and otherwise dispose of any of [her] property, whether real or personal"; and to "make gifts," including gifts made to themselves. The cover letter to the power of attorney provided that defendants were to exercise their powers "in [Madeline's] behalf and for [her] benefit only" upon her request or upon her incapacitation.

In March 1995, Madeline executed the second codicil to her will. In that document she devised the Durham property as follows:

"If at the time of my death my spouse NEAL K. GRIMSTAD has predeceased me and I own [the Durham property,] I give it in equal separate shares to the lineal descendants of my husband NEAL K. GRIMSTAD who survive me, by right of representation."

(Capitalization in original.) Madeline subsequently mailed plaintiffs a key to the Durham property, along with a list of Neal's other assets and the locations of his important financial documents.

Madeline and Neal intended for the Durham property to be used for Madeline's care if necessary. To that end, they held the property as joint tenants, with rights of survivorship, ensuring that Madeline would own the property outright if Neal predeceased her. Additionally, Madeline's second codicil, which provided that the property would pass to plaintiffs only if Madeline owned it at the time of her death, ensured that the property would be available to pay for Madeline's care during her life.

In his deposition, Neal's and Madeline's attorney, O'Neil, testified that Madeline wanted the Durham property to go to plaintiffs "if it was still owned by her," that she did not want it to go to defendants, and that she thought "the house may have to be sold for her care if necessary." O'Neil stated that he believed that Madeline intended for the Durham property to be sold only "if it was the last available asset," but that he could only "guess as to Madeline's intent." He also testified that Madeline expected the property to be sold because she "could not pay medical bills with a house."

Additionally, O'Neil, as well as Miller, a financial planner, advised Madeline that she could create a trust to protect plaintiffs' interests in the proceeds from a potential sale of the Durham property. Madeline never created such a trust, however, because, according to O'Neil, she "didn't want to put the burden on [defendants] to take care of her and trace two assets."

Starting in 2003, the parties sought legal advice on the effect of the second codicil. Defendants, who had suspected that Madeline was suffering from dementia starting in 2001, consulted with attorneys about their ability to sell the Durham property to pay for her future care. Plaintiffs also consulted with attorneys for advice on protecting their inheritance of the Durham property.

Neal died in June 2006, and the Durham property passed to Madeline by right of survivorship. Madeline was subsequently formally diagnosed with Alzheimer's disease

, and defendants arranged for her to be moved into a care facility.

Also in June 2006, defendant Bruce Knudsen met with Miller to discuss financial arrangements for Madeline's care. Miller concluded that Madeline's social security income, trust income, and rental income from the Durham property would be sufficient to cover Madeline's care expenses as they stood at that time. Defendant told Miller that the Durham property might have to be sold if the cost of Madeline's care increased, but stated that they would set aside for plaintiffs any proceeds from the sale that remained after they paid for Madeline's care. At trial, Miller opined that the cost of Madeline's care would likely have increased to an amount that would have far exceeded Madeline's income if she had lived longer, but he also testified that, based on her 2007 to 2010 tax returns and other information provided by defendants, her income had, in fact, been sufficient to pay for her care without the sale of the home.

In May 2007, defendants sold the Durham property to Day, using the power of attorney, for $363,590.68. Day had known Neal and plaintiffs, and defendant Bruce Knudsen had told her that the proceeds would be used to pay for Madeline's care, with any remaining funds going to plaintiffs on Madeline's death. Day, who was a real estate investor, opined that, at the time she bought the Durham property, the expected rental income from the property was between $1,500 and $1,600 per month.

Defendants transferred the proceeds from the sale...